{"id":1129,"slug":"rule-payment-terms-aligned-with-gc-draw-cycle","title":"R8 — Payment terms aligned with the GC's draw cycle; progress-based or milestone-tied, not monthly; reduces scarcity-cognitive friction","kind":"rule","scope":"business","status":"current","audiences":["kevin","candid-team"],"topics":["psychology-aversion","behavioral-economics","construction-act"],"reference_body":"**Rule:** Candid invoice timing is aligned with the GC's own draw cycles — **progress-based, milestone-tied, or quarterly rather than monthly** — wherever the engagement structure allows. Reduces scarcity-cognitive friction without changing total revenue.\n\n**Why:** The operative reference point is the draw cycle's net position, not annual revenue ([[koszegi-rabin-2006-reference-dependent-preferences]]). A monthly invoice arriving during owner-payment lag hits the buyer mid-scarcity, when bandwidth is depleted ([[mullainathan-shafir-2013-scarcity-bandwidth-tax]], [[mani-et-al-2013-sugarcane-farmers-cognitive-test]]) and the loss-domain value-function slope is steepest. Same dollar amount evaluated against a positive-net reference point is materially less painful.\n\n**How to apply:**\n- Default contract term: invoice on project milestones, not calendar dates.\n- For ongoing retainers: offer quarterly billing as the default; monthly as the alternative; never weekly.\n- Where milestone billing isn't possible, offer billing-cycle alignment with the GC's typical draw schedule (ask in discovery).\n- Ontario Construction Act 2026 amendments narrow but don't eliminate the GC's underlying cash-cycle mismatch ([[ontario-construction-act-2026-7-day-deeming-rule]], [[ontario-construction-act-2026-mandatory-annual-holdback-release]]).","rationale_body":null,"metadata":null,"links":{"outgoing":[{"slug":"research-brief-risk-aversion-post-failure-may-2026","title":"Research brief: risk aversion, loss aversion, and post-failure decision patterns in GC and trades-business decision-makers (May 2026)","kind":"reference","scope":"business","link_type":"relates-to"},{"slug":"koszegi-rabin-2006-reference-dependent-preferences","title":"Köszegi & Rabin 2006 (QJE) — reference-dependent preferences; the reference point is endogenous","kind":"reference","scope":"business","link_type":"depends-on"},{"slug":"mullainathan-shafir-2013-scarcity-bandwidth-tax","title":"Mullainathan & Shafir 2013 (Scarcity) — tunneling + bandwidth tax; scarcity consumes cognitive resources for executive function","kind":"reference","scope":"business","link_type":"depends-on"},{"slug":"mani-et-al-2013-sugarcane-farmers-cognitive-test","title":"Mani, Mullainathan, Shafir, Zhao 2013 (Science) — Indian sugarcane farmers; fluid intelligence + executive control measurably higher AFTER harvest payment than before","kind":"reference","scope":"business","link_type":"depends-on"}],"incoming":[]},"created_at":"2026-05-25T13:13:31.111Z","updated_at":"2026-05-25T13:13:31.111Z"}